At a Glance
|Start Date||Q1 2017|
|Approved Budget||USD 1 371 000|
As the third largest economy and the fourth largest energy consumer in the world, India’s development trajectory and action will have a decisive impact on global efforts to limit GHG emissions. India’s NDC is ambitious and reflects its commitment to share the burden; however, much depends on enabling a domestic policy environment, implementation support, and international finance.
The NDC highlights India’s priority to become more energy efficient, shift toward clean energy, and achieve electricity access for all. The supply of affordable energy drives India’s economic growth; however, the current heavy reliance on fossil fuels poses several risks. Increasing imports of crude oil and gas limit energy security, and the use of fossil fuels increases GHG emissions and other pollutants.
More than 50 million households in India currently lack access to electricity, while hundreds of millions struggle with a reliable and affordable supply of electricity, a major constraint to poverty reduction. A primary focus is, therefore, to increase access to clean electricity to rural households and businesses, thereby increasing their economic potential. Offgrid electricity access using solar power is a powerful solution in rural areas to provide more people with lighting and basic energy needs. Many firms have started operations in off-grid energy sector, but have not been able to achieve scale. In order to grow operations, these firms require debt capital for their capex and working capital requirements. However, because of high perceived risk by domestic financial institutions and lack of appropriate financial instruments to service this sector, there is a corresponding dearth of debt capital for off-grid electricity companies.
India’s NDC highlights the need for access to financing, knowledge sharing and transfer of green technologies, and capacity building in order to meet global commitments under the Paris Agreement. Facilitating the flow of domestic and international climate finance and investment would be a key contribution to support India’s NDC implementation.
India is also well positioned to share its experience on sustainable development, particularly on increasing the share of renewable energy in the overall energy mix. This highlights the importance of South-South cooperation and knowledge sharing on India’s mitigation efforts, especially its success stories and technological expertise, with other developing countries facing similar developmental challenges. India’s leadership in setting up and leading the International Solar Alliance (ISA) as an international organization provides GGGI an important opportunity to work together to disseminate renewable energy best practices with GGGI Member countries and beyond. Eighteen GGGI Member countries and seven GGGI partner countries (such as India and China) are also prospective ISA member countries.
Building on 2015-16 results
During the scoping phase in 2016, GGGI conducted a detailed assessment of challenges faced by the off-grid energy sector in India, engaging key stakeholders and government counterparts, where lack of debt capital was identified as the most critical barrier. In the 2017-18 WPB, a GGGI-designed innovative debt fund will unlock the decentralized renewable energy market by making available capital to enterprises for capital expenditure and working capital requirements, and at the same time help develop an ecosystem of investors, lenders, and development institutions.
The 2015-16 WPB also focused on identifying ways to facilitate knowledge sharing between India and other countries on topics of mutual interest, for example through GGGI’s existing programs on capacity development, South-South Cooperation, and knowledge sharing platforms. The 2017-18 WPB will build on this by delivering knowledge sharing outputs to share best practices from India on renewable energy.
PROJECT OUTPUTS FOR 2017-18:
- Prepare financing arrangements for a debt fund to encourage green investments in the off-grid energy sector and submit to financiers
- Identify and document development solutions for scaling up of renewable energy
PROJECT OUTCOMES FOR 2017-18:
- Financing for a debt fund for the off-grid energy sector is approved
- GGGI, together with Ministry of New and Renewable Energy, disseminate practices that have the potential for replication
The project aims to achieve specific outcomes, including financing a debt fund for the off-grid energy sector, and sharing of knowledge between India and other GGGI Member countries on scaling up renewable energy within the framework of GGGI’s South-South Cooperation. GGGI will achieve this by delivering the following outputs:
Financing arrangements for a debt fund to encourage green investments in the off-grid energy sector prepared and submitted to financiers. Following concept and design work done in 2016, GGGI will support the design and financial structuring of the India Debt Fund for the off-grid energy sector. The support will consist of preparing information memorandums, organizing an investor conference, soliciting and finalizing term sheets, and finalizing a legal documentation for fund establishment. GGGI aims to get at least one term sheet finalized and signed.
Development solutions for scaling up of renewable energy identified and documented. GGGI will organize knowledge sharing between GGGI members and ISA partner countries. With 18 overlapping Member countries with GGGI and a mandate to rapidly scale renewable energy across the world, ISA has strong synergy with GGGI, particularly in sharing best practices. In this context, knowledge sharing will focus on India’s experience in renewable energy policy formulation, target setting, and regulatory incentives, as well as India’s experience in renewable energy financing and market mechanisms. GGGI will strategically align its South-South cooperation with India’s recent efforts to disseminate its success stories, expertise, and technologies with other developing countries facing similar developmental challenges, and to learn from their experience.
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